BOSSES should be wary of the consequences of keeping wages artificially low by employing migrant workers, the director of the Commission for Racial Equality in Wales said yesterday.

Firms who were offering worse terms and conditions as a result could be breaking the Race Relations Act, Chris Myant warned.

And it would become difficult to draw the long-term unemployed off benefits if migrant labour were keeping pay levels too low, he said.

Mr Myant told MPs on the Welsh Affairs Select Committee that regulatory bodies were keeping a close eye on firms to ensure they were not pricing local workers out.

“I think there is emerging evidence that we can see from some of the data, like the Labour Force Survey, there is a tendency at the lower end for wage rates to stall at the minimum rates,” he said.

“That poses problems for those in the benefit trap to see that work is of value to them.”

Mr Myant added, “We need to be wary of this, and make sure the development is as limited as possible.”

The problem could develop in Heads of the Valleys areas, he said, but added, “We shouldn’t delude ourselves into thinking it was a challenge we were on top of beforehand. These are young people [whose needs] we weren’t adequately meeting... beforehand.

“These are white, working-class communities; these are the people who could turn to extreme ideas, and we need to make sure they feel included as much as the incomers do.”

Mr Myant said that a number of companies had argued that without migrant labour, they would be driven out of business, with knock-on effects for the wider economy.

The Reverend Aled Edwards, commissioner for the CRE, said other countries that had experienced large-scale migration, such as Israel, had found an initial drop of around 5% in their wages.

“There is an issue of concern there, but what we are beginning to find already is that migrants will very quickly move on, particularly if they have a different skills base,” he said.